LOS ANGELES, CALIF. – Today, the Los Angeles County Board of Supervisors passed a motion calling for a comprehensive approach to protect consumers from the severe harms of predatory high-cost installment loans. The motion, which was introduced by LA County Supervisors Hilda Solis and Sheila Kuehl, instructs several of the Los Angeles County agencies, including the Department of Business and Consumer Affairs, Department of Regional Planning, and County Treasurer and Tax Collector to identify outreach and regulatory approaches to protect residents from harmful financial products.
The agencies and their staff have 120 days to report back with findings and recommendations. This announcement comes as payday lenders begin their assault to repeal the Consumer Financial Protection Bureau’s (Consumer Bureau) recent rule regulating short-term payday and car title loans. Consumer advocates, including representatives from the Center for Responsible Lending (CRL) were present when the motion was passed.
“This is positive step toward protecting Angelinos from abusive predatory lenders. Consumer loans with triple digit interest rates are meant to keep borrowers in a cycle of debt that they can never get out of. This type of bad practice has severe impacts on low-wealth families across the county, especially in our Latino, African American, and immigrant communities,” said CRL California Policy Director Graciela Aponte-Diaz. “We commend Supervisors Solis and Kuehl for their leadership and the entire County Board of Supervisors for taking this pragmatic and commonsense approach to protect consumers from these type of toxic loan products.”
California has no statutory annual percentage rate (APR) for long-term loans ranging from $2,500 to $10,000. According to a 2016 California Department of Business Oversight (DBO) study, 58% of longer-term (high-cost) installment loans had an annual percentage rate of 100% APR
CRL has consistently fought against predatory lending practices across California, including abusive payday lenders. Last December, CRL announced that a DBO research report detailed how payday loan stores in the state are disproportionately located in heavily African American and Latino neighborhoods. Combined, African Americans and Latinos make up almost 44% of the state's total population--and in those communities, on average, nearly 60% had six or more payday loan stores compared to white communities at 28%. DBO's research reflects a CRL study that shows even after controlling for income and a variety of other factors, payday lenders are 2.4 times more concentrated in African American and Latino communities.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at ricardo.quinto@responsiblelending.org.